How to use people analytics to navigate a recession

‍Three lessons for HR leaders to navigate a recession

Business and HR leaders might have spent a few months breathing easier than at the height of the pandemic. But that relief has unfortunately been short-lived, as a new recession looms large.

Goldman Sachs predict the UK will slip into recession by the fourth quarter this year, with organisations facing a “cost of doing business” crisis. The same story is true across Europe, where “high inflation and sluggish growth” are predicted until 2024 onwards.

One lasting takeaway from the pandemic and associated recession was the business impact of great HR leadership. That is, HR leadership that truly understands your people and can act on what matters.

Let’s explore three of the biggest lessons HR leaders can take from the coronavirus recession, to better prepare the business for the recession that’s coming next.

1.   Uncertainty hurts employee engagement—but it’s also an opportunity.

It won’t be news to you that the pandemic triggered an enormous amount of stress, burnout, and anxiety.

The British Association for Counselling and Psychotherapy reported in April 2021 that 48% of workers agree the pandemic has made their job more stressful, for example. Our own data reflects the same, showing stress levels increasing massively in 2021.

These trends will likely repeat themselves as we enter the next recession. 68% of UK employees already say the cost-of-living crisis is having a negative impact on their mental health and wellbeing, for instance.

And the current ‘quiet quitting’ phenomenon is a testament to many employees’ unease. In fact, our data shows 2021 sparked a sharp decline in employees who feel their workload is reasonable — and that’s still dipping. High workloads during times of uncertainty can drive major burnout.

But the impact of the pandemic on your company’s ‘temperature’ wasn’t all bad. Uncertainty also offers opportunity—and that too is a trend that could repeat.

For example, our COVID-19 data actually shows a significant spike in positive answers to the question “Would you put in a significant extra effort to ensure that [your company] succeeds?” at the outset of the pandemic. Josh Bersin explains:

“If you look at the data on engagement, it’s actually very, very high. People are actually kind of comforted by work because their daily home life and family life has been so difficult with the pandemic. If the company takes good care of them and they have clear responsibilities, work in some ways is a respite from the uncertainties of everyday life…” (Listen to the podcast)

Current data suggests the same pattern could hold true today: 83% of UK employees say they’d swap jobs for an employer who offered more financial support during the cost-of-living crisis.

If your organisation does the right things to support your people—to provide “respite from the uncertainties of everyday life”, as Josh puts it—uncertainty can be a springboard to higher engagement, higher discretionary effort, and stronger loyalty.

2.   Strategic investment protects future growth.

Tightening the purse strings is a natural reaction to turbulence. And HR—often seen more as a cost centre than value driver—has often been one of the first budgets cut. During the pandemic, Gartner’s 2021 HR Budget and Staffing Survey found that 34% of HR leaders expected budgets to decrease, for instance.

But COVID-19 also showed us that cutting HR spend can easily become a false economy. As Gartner point out:

“Although difficult times call for difficult actions, HR leaders must be careful not to run the risk of destructive cost-cutting that results in lost productivity and derails future growth opportunities.”

To protect organisational resilience long-term, business and HR leaders must take a strategic approach to cost optimisation, not a knee-jerk one. That doesn’t start with scrutinising your biggest line items but with protecting your biggest growth engines.

Direct booking solutions provider Bookassist is a great example. When the travel sector collapsed practically overnight, Bookassist didn’t close shutters on spending. Rather, they knew the only route through turbulence was to truly understand how their workforce were feeling, to step up support.  

Thanks to Winningtemp, Bookassist could protect engagement even with staff on furlough, improve manager conversations, and keep people motivated. Taking this strategic long-term perspective put Bookassist in a much stronger position for future growth once the travel industry opened backup.  

3. To better support your people, you need better data.  

To look after your people, you need to truly understand what matters to them. But the pandemic taught us that engagement is complex and changes fast. And the impact of getting it wrong can be long-reaching: entire industries have barely bounced back from the Great Resignation, like the UK hospitality sector.

Employee sentiment is a fluid, shape-shifting thing. Employees can be engaged but stressed; overworked but inspired; anxious but focussed. They can feel great one moment, underappreciated the next. Teams can work together today; against one another tomorrow.

And those problems can spiral fast. Solvable frustrations can turn into churn before you can say ‘exit interview’.

To provide better support to your people during times of turbulence, you need real-time data on how they’re feeling, to spot trends in satisfaction and turnover before they start. Armed with these insights, you can take preventative measures to protect engagement and guard against churn, early enough to have an impact.

This becomes especially important in the wake of the last pandemic, with turnover now at record highs: in the UK, a third of the workforce is considering quitting this year.

The pandemic brought a tsunami of change. The next recession seems likely to bring less radical overhaul but the need for agile responsiveness should be a lasting lesson.

For instance, do you know how your people are coping with the cost of living crisis? With real-time insights you can identify if increasing prices are a concern, decide to offer additional support, and track the effectiveness of this initiative back to engagement ROI.

COVID-19 taught us what showing up for your people looks like, and it hinges on better data.  

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Recessions widen the gap between the leaders and the losers—and that’s either a huge threat or a huge opportunity depending which way you view it. One thing that the pandemic absolutely proved is the importance of strong people leadership, to steer bravely through the headwinds of disruption. This demands better data, to help organisations better understand and serve your workforce—so your people can better serve you.

Winningtemp is an intelligent employee experience platform that uses AI and data-driven insights to reduce employee turnover, decrease negative stress, and improve job satisfaction. Watch our two-minute video to learn more.‍